#EconQuestion Why does anyone think that increasing aggregate demand stimulates the economy, on net? True, if more people are spending, that's more revenue for businesses, and more dollars flowing through the economy.

But spending trades of directly with saving, which (if people are investing, or at least keeping their money in banks) flows through the economy as investment.

And a society saving more and spending less will have cheaper credit. Overall, it seems better for the long run health and growth of a society for more resources to flow to investment than to consumption. Investment (generally) builds on itself more than consumption does.

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